logo

FX.co ★ OPEC captures largest market share since 1975

OPEC captures largest market share since 1975

OPEC captures largest market share since 1975

The United States and other countries are increasingly dependent on the Middle East for oil. Instead of cutting output to prevent prices from falling, OPEC ran a huge budget deficit but maintained high levels of production.
This eventually influenced crude oil prices and many small oil companies including those from the US were booted out of the market. Despite the fact that overall profit of the cartel is doubtful, its market share rose to the highest level in more than 40 years.
The world is at risk of being too dependent on the Middle East for oil, warns the executive director of the International Energy Agency, Fatih Birol.
The global market share of oil producers in the Middle East reached 34% at 31 million barrels a day. The US saw its output cut by 900,000 barrels a day since April 2015 as shale companies halted drilling amid low oil prices. Meanwhile, Iraq, Iran and Saudi Arabia increased their production.
The US appeared to be dependant more than others. As long as oil prices had been above $100 a barrel, many people bought fuel-efficient cars. But falling oil prices halted the efficiency improvements. Thus, in 2015 auto sales hit record high, while 2016 is set to be a record year for gasoline consumption in the United States. It is bad news for imports dependency.
The IEA said cheap oil could trigger a rise in prices of basic consumer goods. Instability only increases this likelihood.
Indeed, industrialized countries now enjoy economic benefits from low oil prices, but this means reliance on the Middle East for crude in the long term.
The IEA urges the US and other countries to reduce demand, imposing stricter fuel efficiency standards on vehicles. That will enable to reduce greenhouse gas emissions and also to reduce dependence on the Middle East as well as to protect economy from volatile oil prices.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade
Go to the articles list Open trading account